What Does Negligence Mean In Business?

Small business owners often take on various responsibilities, from producing the product or service to running the accounting of their business. However, being overwhelmed in the day-to-day functions in your business can lead to corners being cut and mistakes being made. These mistakes open the door to a potential lawsuit, with the other party pinning a case on you due to a term called negligence. Understanding the definition of negligence, common examples, and effective strategies to reduce the risk are important as a small business owner.

What is Negligence?

According to Australian Law, negligence occurs when someone, often times you, causes harm or damage to a third party because of careless actions. The damage does not have to be intentional to be classified as negligence. In fact, most negligence cases are due to unintentional harm. Regardless of if intention is present, you can be faced with a lawsuit any time a third party is injured due to your direct actions.

As a small business owner, you are often liable for any negligence that occurs within the realms of your business, whether you engaged in the careless act or an employee did.

What are Common Example of Negligence?

Going through a few common examples of negligence will help you understand the level of due care you should uphold in your small business.

One of the top negligence cases that occurs is due to premise liabilities, such as a slip and fall accident. Let’s say you mop the floor, but never put up a wet floor sign. If a customer were to slip and fall, they could sue you because you neglected to put up a sign. Another example of negligence in the construction industry is when something is completed improperly. Failing to run a wire correctly could result in electrocution of a third party, making your business liable.

How Can I Reduce the Risk of Negligence?

The good news is that negligence risk can be mitigated with a few simple steps.

The first is to hold yourself and your employees to high standards. This means no cutting corners and being cautious of the effects of your actions. When a high level of due care is weaved into your procedures and processes, you will see reduced negligence risks.

Additionally, have a liability clause worked into all contracts. This gives you more leverage to ward off lawsuits. For example, include that you are not responsible after a certain amount of time.

Finally, ensure you and your employees are all adequately trained. This can either be specific to negligence, or to industry standards. Set out a company policy that requires employees to regularly undertake training and to adhere to certain guidelines. This can help mitigate the risk of claims arising due to negligence.

Protect Yourself Before It Happens

Understanding the conditions surrounding negligence is critical as a small business owner. However, accidents do happen. In the event you are sued for negligence, you want to be sure your insurance coverage is sufficient to cover any damages. When your cover limit is too low, in some cases, third parties have the ability to come after your personal assets, which could not only bankrupt your business but your personal wealth as well. Mitigate this risk by protecting yourself with the proper insurance.

Here at upcover, we provide small business owners an easy way to get an instant quote online. In seconds, you can be covered for public liability, professional indemnity, products liability, cyber & security insurance and more. Get a quote today and protect your business and yourself.